SEOUL, Jan. 24 (Yonhap) -- Sudden unification between South and North Korea could cause a flood of refugees across the land border that could rock the local labor market, a business organization said Tuesday.

A report by the Korea Employers Federation (KEF) predicted that if the North Korean regime collapsed suddenly, up to 3.65 million people from the communist country may cross over into capitalist South Korea.

"Even under a conservative estimate, up to 1.61 million North Koreans may move to South Korea, mainly because of the huge difference in wages and employment opportunities," the KEF said.

It said such a wholesale movement of people could seriously disrupt the local labor market and cause other social problems.

"North Koreans who migrate into South Korea will probably find work as menial laborers and take over positions held by foreign migrant workers," the federation said.

There may be some 470,000 jobs that North Korean workers may be able to fill immediately in case the two Koreas unify, although exact numbers are hard to predict, it added.

The federation, representing the interest of entrepreneurs, said government policymakers should carefully look at the confusion caused in the aftermath of Germany's unification to prevent similar developments taking place on the Korean Peninsula.

They stressed that measures must be taken to limit wage hikes in North Korea after unification so it does not endanger sustained economic growth.